The match around the election of the new board of directors of Enel it is incandescent. After presentation of the third list, majority, by the Covalis fund owned by Lithuanian Zach Mecelis, another major investor, Mondrian, which has a 1,7% stake in Enel (equal to a value of around one billion out of 60 of the market capitalisation), said he was "extremely disappointed" by the "total lack of transparency" in the process of appointing the new Board of the electric giant. But why do foreign funds want to overturn the appointments of Enel's top management?
Enel appointments, the criticisms and fears of foreign funds
It was foreseeable that some foreign funds, after the rain of sales of Enel shares on nomination day di Flavio Cattaneo e Paolo scaroni, respectively as CEO and president, would have expressed criticism of the government's moves on Enel. But not in these tones. According to the head of Covalis "Enel's shares would rise by 30-40% if this process were managed differently". He thinks the company's stock is trading at a lower price than its European rivals - such as Hispanic Iberdrola and French EDF - because the Italian government has decided to favor political relations over shareholder interests. While Mondrian fears that the replacement of Francesco Starace with Flavio Cattaneo will have repercussions on Enel's strategy for the energy transition, judged positively.
What is certain is the fact that several foreign funds have felt the need to write such harsh letters to the government led by Giorgia Meloni suggests that something in the mechanism of appointing Italian public subsidiaries does not work very well.
Mondrian takes the side of Starace
Mondrian managers, Elizabeth Desmond e Zsolt master, have been particularly tough on the Treasury. “We are concerned about the process of electing the board of Enel - the two Mondrian exponents begin - we highly esteem the current CEO Francesco Starace and we are very dissatisfied with the complete lack of transparency on the process and the criteria for his replacement, so as for the lack of involvement from the Italian government despite our efforts to establish a constructive dialogue”.
In this regard, Minister Giorgetti and his team have prepared a report in which they explain how the appointments were proceeded and will disclose it to the market in the coming days in order to dissolve all doubts from the funds.
Enel: what will happen at the May 10 meeting?
The shareholders' meeting of the Italian multinational is convened on 10st May. Enel's shareholding includes the Ministry of Economy and Finance with 23,6%, institutional investors with 59,4% and individual investors with 17%. And it is likely that foreign funds will try to keep the tone high to mobilize small shareholders.
Enel as a "strategic company" is subject to the Golden power. However, at the moment, there are no elements to open the dossier given that the list presented by the government will (probably) have the majority of votes. And if there seem to be no doubts about Cattaneo's appointment as CEO, there could be some about Scaroni's. Since this is appointed directly by the shareholders' meeting with a separate vote, and if the list of the Mecelis fund condenses at least 5% of the voting capital, he could be entitled to a seat on the board.
